Correlation

In statistics, a correlation is a relationship between two variables such that at each value of the first corresponds a value of the second, followed by a certain regularity. This relationship is evaluated with a number that varies between 1 (when there is maximum inverse correlation) and -1 (when there is maximum inverse correlation).Two assets with correlation 1 are such that the movement of an asset corresponds to a similar movement and in the same direction as the other, in the same way two assets with correlation -1 are such that the movement of an asset corresponds to a similar movement but in the opposite direction of the other. Two assets are uncorrelated when they have a 0 correlation, in this case the movements of the two assets are independent of each other.The correlation matrix is ​​composed of a grid in which for each pair of assets the correlation is shown in numeric format, a graph that shows a point for each pair, distributed between 1 and -1. In beeTrader the correlation is calculated by Pearson’s formula.